RALEIGH - United States Attorney George E.B. Holding announced that in federal court
today a jury convicted ERIC OMAR JONES, 41, of Clinton, North Carolina.
Following the six-day trial, the jury found JONES guilty on all
counts of the Superseding Criminal Indictment that was returned on
February 2, 2011, which included one count of conspiracy, fifteen
counts of bank fraud, and two counts of false statements to an FDIC
insured bank. United States District Judge James C. Dever III,
presided.

The Government’s evidence showed that between 2002 and 2004,
JONES participated in a scheme to defraud Omni National Bank and
other banks. JONES used the credit of straw purchasers to obtain
loans from Omni National bank in the name of those individuals. He
then used that loan money to purchase properties through his
company, University of Hard Knocks Investments, Inc. and then
immediately resell them to the straw purchasers, whom he referred
to as investors. Five straw purchasers testified at trial. David
Pikul, the closing attorney who handled these transactions, also
testified at trial. On April 11, 2011, Pikul pled guilty to
conspiring with JONES to commit bank fraud and to make false
statements to an FDIC insured bank. JONES enticed the straw
purchasers to participate by promising them that he would make
mortgage payments on the properties, take care of repairs, and sell
the properties at a profit. These promises were untrue and
fraudulent.

Further evidence showed that to obtain loans from Omni and
other banks, JONES made numerous false statements on the HUD
settlement forms that were submitted to the banks. These forms hid
the fact that the bank’s money was being used by JONES’ company to
purchase the property. They also often falsely stated that a down
payment was being made—where there was none. Sometimes the HUD
forms falsely stated the seller of the property. As part of this
scheme, on at least four occasions, JONES sold the same property to
the same straw purchaser a second time for a higher price. In
addition, JONES was living in one of the properties he had sold to
one of the straw purchasers. He was doing this without her
knowledge and without paying any rent or mortgage. This straw
purchaser ultimately had to evict him.

JONES testified at trial admitting he had ten years of
experience in the mortgage and real estate industry at the time of
the crime. He also admitted receiving and signing many of the
false HUDs–knowing they were false. He claimed that the closing
attorney, David Pikul, had come up with this idea and had told him
that it was a correct way of doing things. He admitted receiving
a lot of money through University of Hard Knocks Investments and
using that money, considered by him to be his business “profits,”
to take several gambling trips to Las Vegas, Atlantic City, South
Carolina, and New Orleans.

Mr. Holding stated, “Individuals who commit mortgage fraud
contribute to the problems in our banking system. This is a
serious crime that affected not only the banks but the individuals
whose credit was used.”

At sentencing, scheduled for the August 1, 2011, term of
court, JONES faces up to five years’ imprisonment for the
conspiracy charge and up to 30 years’ imprisonment for each of the
other 17 charges.

The Federal Bureau of Investigation and the North Carolina
State Bureau of Investigation participated in this investigation.
David A. Bragdon and William M. Gilmore represented the United
States.